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THEMES

IT CONTRACTS: Best practice (and bad mistakes) Rachel Burnett Vice President (Forums) British Computer Society Solicitor, Burnett IT Legal Services rb@burnett.uk.net March 2006. THEMES. Avoid not having a contract at all Create a formal contract in writing

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THEMES

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  1. IT CONTRACTS:Best practice (and bad mistakes)Rachel BurnettVice President (Forums) British Computer SocietySolicitor, Burnett IT Legal Servicesrb@burnett.uk.netMarch 2006

  2. THEMES • Avoid not having a contract at all • Create a formal contract in writing • Prioritise expectations and requirements • Negotiate a readable and understandable contract • Avoid unreasonable promises • Implement by modular deliverables, not all-or-nothing • Work at the supplier/customer relationship • Communicate - by using the contract

  3. AVOID NOT HAVING A CONTRACT AT ALL • Unjust enrichment” • Benefit received, expense sustained • Would the services normally be performed free-of-charge? • What risk has the supplier undertaken? • Did the customer obtain real benefits? • Consider the circumstances - was one party at fault? • Uncertainties and risks abound where there is no contract

  4. CREATE A FORMAL CONTRACT IN WRITING • Little formality is needed to create a contract • So it helps to define the contract terms unambiguously

  5. PRIORITISE EXPECTATIONS & REQUIREMENTS • If something is important, discuss it • Reach agreement about it • Record in writing at the outset what the parties expect and agree

  6. NEGOTIATE A READABLE & UNDERSTANDABLE CONTRACT • Understand the meaning of the contract wording before signing up • Do not inadvertently affirm the contract and lose the right to terminate

  7. AVOID UNREASONABLE PROMISES • Standard terms and conditions • Unfair Contract Terms Act - "reasonableness“ • Contract Boundaries and the “Entire Agreement” • Misrepresentations

  8. IMPLEMENT BY MODULAR DELIVERABLES, NOT ALL-OR-NOTHING The contrast is • Complete failure of supply Or • Failing to meet the whole specification exactly

  9. WORK AT THE SUPPLIER/CUSTOMER RELATIONSHIP • Active arm’s length co-operation • Commercial bargaining strengths will be taken into account • The contract should balance respective rights and responsibilities

  10. COMMUNICATE – BY USING THE CONTRACT Good contracts • Help the parties achieve their strategic and commercial aims • Regulate the commercial relationship • Establish relevant details • Are legally enforceable

  11. CONCLUDING LESSONS • Have a clear written contract • Relate the legal contract to the working transaction • Take account of laws, cases, commercial practice • Use the contract to add value

  12. CASE REFERENCES • Peregrine Systems Ltd v Steria Ltd (2005) • Vedatech Corporation v Crystal Decisions (UK) Ltd. and Anor [2002] EWHC 818 (Ch) • Countrywide Communications v ICL Pathway (QBD, 21 October 1999). • St Albans City & District Council v. ICL Limited [199] FSR 251 CA • South West Water v International Computers Limited [1999] WL 1048279 QBD (T&CC) • Horace Holman Group Limited v Sherwood International [2001] All ER [D] 83 • Watford Electronics v Sanderson CFL Limited [2002] FSR 19CA • Anglo Group plc v Winther Brown & Co Limited & BML (Office Computers) Limited 2000 • Pegler Ltd v Wang (UK) Ltd [2000] WL 191142 QBD (T&CC) • Ruxley Electronics and Construction Limited v Forsyth [1996] AC344 HL

  13. IT CONTRACTS:Best practice (and bad mistakes)Rachel BurnettVice President (Forums) British Computer SocietySolicitor, Burnett IT Legal Servicesrb@burnett.uk.netMarch 2006

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